Chile's Codelco signs LNG deal with Metrogas

Chilean state-owned Codelco has signed a $100 million deal to purchase two shipments of LNG from natural gas distributor Metrogas, part of the copper giant's efforts to reduce high energy costs.

The agreement calls for Codelco to buy two 165,000-cubic-meter (5.8-million-cubic-foot) liquefied natural gas shipments, one to be delivered this year and the other in 2015.

"We've achieved savings that will help the company continue to reduce production costs, a task in which significant progress was made in 2013," Codelco's energy and water senior manager, Andres Alonso, said of the accord.

The deal will ensure natural gas supplies for the company's Chuquicamata and Radomiro Tomic mines in northern Chile.

The Chilean government has expressed concern over the recent rise in Codelco's production costs, which averaged a record $2.64 per pound in 2012, a 29 percent rise from 2011, due to lower copper-ore quality and higher energy prices.

The agreement confirms the present-day importance of natural gas in the productive structure both nationally and globally, Metrogas CEO Victor Turpaud said.

"Its current competitiveness and environmental advantages are increasingly in demand," he added.

Codelco - the world's largest copper producer - is the main source of revenue for the Chilean Treasury, which receives all of the company's net income. EFE